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Honda may move to two-shift production following strong demand pickup

Moneycontrol logo Moneycontrol 21-06-2021 Swaraj Baggonkar
a motorcycle parked on the side of a road: Honda may move to two-shift production following strong demand pickup © Stanford Masters Honda may move to two-shift production following strong demand pickup

Honda Motorcycle and Scooter India (HMSI) may move to a two-shift production system across its four plants from the current single-shift system soon, following a robust pickup in demand in the current month.

The second-largest producer of two-wheelers in India witnessed its retail sales and enquiries growing by more than two times in June, compared to May, forcing it to have a re-look at its production plans. Enquiries for June 2021 have already hit the June 2020 levels, said a senior executive of HMSI.

Talking to Moneycontrol, Y S Guleria, director (sales and marketing), HMSI, said: “Based on the feedback from our operational network and orders we have received, we have started studying moving from a one-shift to two-shift production system. Currently, all our four plants are operating in single shifts but seeing the demand trend from the network, we have started studying how to move to a two-shift operation gradually.”

Guleria did not provide a probable date for starting the second shift as it is under study and will depend on the demand trend in the coming days and also on the supply-chain situation.

He, however, added that there has been a strong surge in retail demand from the western region when Maharashtra went under lockdown, much before other states. This has created a pent-up demand, leading to a strong demand pull.

“We have 80 percent of our outlets open, as of now, on a national basis. There are states in the south like Tamil Nadu, Karnataka and Kerala, and in the east, like Odisha, which are still under some kind of lockdown. Month-on-month retails for June are at 2.6 times those of May. Even the enquiries have grown by 2.6 times, compared to May. The traction is good and the sales momentum is building up,” added Guleria.

Even as the price of petrol is crossing Rs 100 per litre, auto companies are revving up factories to cater to the huge rush in retail demand. On June 18, Hyundai Motor India announced the start of the third and final shift at its plants near Chennai from June 21 in an attempt to bring down the waiting period on some of its models like Creta, which has increased to six months.

Rural market

COVID-19 has hit rural India more severely in the second wave, compared to the first wave, causing apprehensions for auto makers, especially two-wheeler makers. Bike and scooter makers generate anywhere between 25-50 percent of their volumes from rural and semi-urban markets.

“The impact on the rural market was something which was not there last year. That is why we are closely watching the rural market. At the same time, we also have positives like the new MSP (minimum support price) for Kharif crops, and the monsoon, which is expected to be normal for the third consecutive year,” Guleria added.

The two-wheeler industry is hoping that with the easing of lockdown restrictions by many states, the rural and semi-urban markets would also witness a pent-up demand in the run-up to the festive season due to the postponement of weddings during the April-June quarter to the July-September quarter.

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